How to deal with foreclosure proceedings, building inspection and stamp duty payment

Compiled by Tharmini Kenas tharmini@thestar.com.my

Ask Me Anything is a platform for all readers to ask about all things property. If you have any inquiries, key in your questions at bit.ly/AskMeAnythingProperty .

This week, we tackle questions related to auction and sub-sale properties. The answers are provided by Low & Partners managing partner Datuk Andy Low Hann Yong, Canaan Building Inspection Sdn Bhd project director Sr Joshua Kang and Messrs Eunice Tan & Partners founder Eunice Tan.

Q1: What happens when foreclosure proceedings are initiated after a property owner defaults on the monthly instalments? Does the owner lose the property, or gain cash from the sale of the property (minus the bank loan)?

A1: In the event of default, the bank is entitled to foreclose the property. The bank will apply to the court for an Order for Sale and then sell the property by public auction. The sale proceedings will be used to settle all the outstanding sums due and owing to the bank as well as other expenses such as auctioneer fees or legal fees that may be incurred in commencing the civil suit and/or foreclosure proceedings. If there is any surplus, the bank will refund the sum to the owner.

Q2: What are the issues/aspects to give attention to when buying sub-sale property?

A2: The building inspection for a subsale property is vastly different from that of a new property. A sub-sale property would have been in the market for some time and probably used by the previous owner. Hence, it is subjected to wear and tear. You have to make sure the structure is sturdy, and the property is safe to be occupied. Check the mechanical and electrical fittings, and the piping for signs of water leakage.

Q3: I bought a house from a second auction at RM550K. However, during the first auction, the bank set the market price at RM650K. Now, should the stamp duty payment follow the bank’s market price of RM650K or the second auction price of RM550K? Is the auction price more accurate than market price?

A3: The stamp duty of the transfer of the property either by way of Memorandum of Transfer or Deed of Assignment shall be sent to the Stamp Office for adjudication to determine whether the
stamp duty is chargeable based on the contract price i.e. the second auction price (RM550k) or the market value of the property, whichever is higher. The fact that no one is willing to buy the property at that price does not mean that the auction price is more accurate than the market price. The Stamp Office will determine the market value of the property by taking into consideration the recent transacted price, launch prices of any new and upcoming surrounding projects, plus other factors.

Disclaimer: All data and information provided are for informational purposes only. All information is provided on an as-is basis. All users are strongly encouraged to seek professional advice before relying on any data and/or information provided.

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